Senator the Hon Mathias Cormann
Minister for Finance
Date: Wednesday, 13 May 2015
TOM ELLIOTT: That was the Mojos singing back in the late 70s and early 80s, it was a community service message put out there by the Nine Network, ‘have a go’ it said to get the country back on its feet. It is interesting, because both the Prime Minister and the Treasurer used the phrase ‘have a go’ between them over 30 times in the past 24 hours. Joining us on the line now, Federal Government’s Finance Minister Mathias Cormann, Mr Cormann, good afternoon.
MATHIAS CORMANN: Good afternoon Tom, good afternoon to your listeners.
TOM ELLIOTT: Have you been using the phrase ‘have a go’ much in the past 24 hours?
MATHIAS CORMANN: Absolutely, because last night the Treasurer delivered a Budget to help Australians who are having a go and we want small business to have a go and help us strengthen economic growth and job creation over the year ahead.
TOM ELLIOTT: But do you think that sort of slogan is going to make someone sort of go out and go righto, I’ll borrow some money, I’ll expand my business, I will buy a bigger house, I will do whatever. I mean, is that the message you’re trying to give to people?
MATHIAS CORMANN: The slogan won’t, but what stands behind it we believe will. We have put forward a significant package, incentivising small business to have a real crack at getting ahead. The 1.5 per cent tax cut for small business, the $20,000 instant asset write off which enables businesses that generate less than $2 million in annual turnover to essentially deduct from their tax any investment in assets or equipment that helps them generate stronger growth in their own business and helps them employ more Australians to deduct that sort of investment immediately from their tax. So we believe that all of these measures taken together will help us strengthen growth and create more jobs.
TOM ELLIOTT: Can I ask, I know it is a collegiate sort of method the way you put the Budget together but I mean it is well known that Joe Hockey came from a small business background. Was he the person inside the Cabinet room or the Expenditure Review Committee who was pushing for these small business measures to be sort of front and centre in the Budget?
MATHIAS CORMANN: Joe Hockey has certainly led the charge as the leader of the economic team in relation to all aspects of the Budget. But you’re quite right, he does come from a small business background and he did take a particular interest in this. He was particularly focused on getting a very effective small business package together. This specific measure is actually a measure that Joe personally championed through the whole Expenditure Review Committee process.
TOM ELLIOTT: This time last year we were told that there was a Budget emergency, that Labor’s sort of wasteful spending over the previous six or seven years had put the country onto a precipice, that if we didn’t get the debt under control things were going to go badly wrong. Now, that has all changed inside one year. Can we conclude that the debt emergency is not more?
MATHIAS CORMANN: The problem when we came into Government is that the economy was weakening, unemployment was rising and the Budget position was rapidly deteriorating moving forward on the back of an unsustainable spending growth trajectory. The challenge was that after record terms of trade and record revenue on the back of the mining boom, revenue was actually coming off in the tail end of the Labor years. But exactly at that time, the previous Government decided to ramp up expenditure federally by more, permanently and structurally into the future, in particular in the period beyond the published forward estimates. So what we have had to do is that we have had to make decisions to get spending on a more sustainable foundation for the future. We have had to make decisions to control spending growth and instead of growing spending at 3.6 per cent above inflation per year, we are just now growing expenditure by 1.5 per cent above inflation per year. That is helping us get back to surplus, it is helping us reduce spending as a share of the economy and it is helping us get back to surplus.
TOM ELLIOT: My reading of the Budget papers, both last night and this morning, was that you’re trying to keep a lid on overall spending and you have talked about that, but at the same time you are hoping that the Australian economy starts growing more rapidly back to three and a quarter, three and a half per cent. Are you confident that is going to happen, because I mean the financial crisis a few years ago showed us that it is often very hard to predict economic growth? Sometimes it does what you don’t want it to do and goes down.
MATHIAS CORMANN: You are certainly right that it is very hard to predict what will happen in the global economy in the future. We are encouraged by recent developments when it comes to global economic growth. What we are trying to do is to ensure that Australia is in the most resilient position possible to deal with future economic challenges coming our way from around the world, but that we are also in the best possible position to take advantage of the opportunities coming our way. We are at the heart of the Asia-Pacific. There are significant opportunities for us. This is the part of the world where most of the global economic growth will be generated over the next few decades, so we need to ensure that we are in the best possible position to take advantage of that and yesterday’s Budget was the next step in our economic plan to position Australia for that.
TOM ELLIOT: Now what about the Senate? Last year you hit a major roadblock in the Senate, some fairly important bits of the Budget didn’t get passed, they still haven’t been passed. Are you more confident this time around that the Senate will approve your plans?
MATHIAS CORMANN: More than 80 per cent of our Budget last year has been passed. It is true that some of the more hotly debated issues are still on the table. Some of them we have taken off the table, some of them we have adjusted and some of them we are pressing ahead with. It has always been thus. Governments which did not have the numbers in the Senate have had to engage with the Senate. That is what we have been doing in recent months. That is what we will be doing from here on in. We believe that we have put together a Budget that is measured, responsible and fair. We believe it is a Budget that is in the national interest. We believe it will help us strengthen growth and opportunity, which is what Australia needs right now. Hopefully the crossbench, but also the opposition will start working with us, focused on the national interest.
TOM ELLIOT: We are speaking to Mathias Cormann, the Finance Minister who has had a very important part in formulating last night’s Federal Budget. Now, Victorian Premier, Daniel Andrews has come out and said today that he is not going to give back the Federal Government the $1.5 billion that was advanced to the State Government last year for East West Link. Now the Budget papers say it has to be repaid, the State Premier, Victoria’s Premier Daniel Andrews says he will not repay it. What happens next?
MATHIAS CORMANN: The Australian Government signed relevant agreements with the Victorian Government. This will be resolved. The money was obviously provided for a particular purpose. There were conditions attached to it. It was to go into the construction of the East West Link. A project that the Federal Government continues to be committed to. We can’t believe that any Government in Australia would decide to spend $1 billion of taxpayers’ money not to build a road. Now we have got the Victorian State Government turning around telling us that instead of building the East West Link they want to build the West East Link but they actually don’t want to put any State Government resources behind that project at all. They have come to the Commonwealth and said they wanted us to take all of the Government responsibility for that particular project, which seems a bit strange as well.
TOM ELLIOT: So if Daniel Andrews refuses to repay the money, will you simply subtract $1.5 billion from, I don’t know the next GST payment and take that out of Victoria’s funds?
MATHIAS CORMANN: There is an agreement between the Commonwealth and the State and I am very confident that when it is all said and done, the Victorian Government will comply with the relevant terms in that agreement.
TOM ELLIOT: That will be very interesting to see. I know you are a busy man, you have to go. Mathias Cormann, Finance Minister, thank you for your time.
MATHIAS CORMANN: Always good to talk to you.